A wave of optimism swept through global financial markets, boosting U.S. stocks. A cease-fire between the United States and Iran led investors to believe the worst phase of the Middle East conflict has passed. The rebound in risk appetite propelled the S&P 500 index to close 2.5% higher. Crude oil prices settled below $95, alleviating concerns about an energy crisis and simultaneously boosting bets that the Federal Reserve will cut interest rates in 2026. Wall Street's so-called fear gauge, the VIX, fell to pre-war levels. Airline stocks, which were previously hit hard by soaring fuel prices, surged sharply. Emerging market equities recorded their largest gains since March 2020. Meta Platforms, Inc. closed up 6.5% after the company unveiled its latest artificial intelligence model on Wednesday. ExxonMobil declined 4.7% as the company disclosed that the war caused a 6% loss in its global production for the first quarter. The cease-fire for two weeks was announced approximately 90 minutes before a previous deadline. Although reports indicated that hostilities in the Middle East continued, the agreement helped ease concerns about a global economic crisis. "This reaction is a classic macro-economic script," said Fawad Razaqzada of Forex.com. "Risk assets are in demand, oil prices are plunging, and the dollar's safe-haven premium has significantly receded." The White House announced that U.S. Vice President JD Vance will lead a delegation to Pakistan later this week to hold talks with Iran on reaching a lasting peace agreement. Although an Israeli attack on Lebanon was reported to have halted tanker traffic through the Strait of Hormuz, it was not significant enough to unsettle the market. Razaqzada noted, "Investors believe oil prices are poised to fall further and the Strait of Hormuz will reopen." From an economic perspective, the minutes from the Federal Reserve's March policy meeting showed that most officials were concerned a prolonged war could damage the labor market and necessitate interest rate cuts. Simultaneously, many policymakers emphasized inflation risks. "These minutes are noticeably lagging," pointed out David Russell of TradeStation. He added, "With oil prices retreating, inflation currently no longer poses a significant risk." At the close, the S&P 500 index was up 2.5% at 6,782.81 points. The Dow Jones Industrial Average rose 2.9% to 47,909.92 points. The Nasdaq Composite Index increased 2.8% to 22,634.99 points.
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